Tuesday, July 19, 2011

Mismanagement Killed Borders

After doing 4 interviews last week as a part of the Summer Blog Blast Tour, I had planned to get back to reviewing. I even have a few saved in draft and ready go, which is not the norm. Though I had to take moment and talk about Borders Books going out of business. I thought I would do such a post in May when the Borders I worked at in Atlanta for over 10 years closed. But when the doors shut for the last time, I just didn't feel the need. Maybe it was the last round of drinks with co-workers turned friends, or maybe I just needed the distance, and not to be reminded of how much I gave and how little I received in return.

When Borders filed Chapter 11, customers kept on asking why is Borders is trouble? For many the simplest answer would be ebooks. While increase in digital reading definitely played a part it's was mismanagement that killed Borders. If you really want to know what's going on with Borders I highly recommend Borders Live Journal Recently someone posted Borders CEO going all the way back to 1999. Out of the 5 CEO's none had any experience in the book industry. They all staffed Ann Arbor with people that had little to no experience with books. This inexperience showed in their buying habits, discount program, endless section reorganization. I could go on but I won't. Any former Borders employees feel free to add to the list in the comments. I will focus my attention on the three stated

1. No Regional buyers,cost Borders a lot of money. Certain authors and books sell better in different markets. And surprise surprise Southern authors are very popular in Atlanta. Unfortunately our first draw for many best selling Southern authors like Fannie Flagg and Pat Conroy was around 10. Same as the other markets and not nearly enough to get us through a weekend. It was embarrassing to have tell a customer on Friday that we are sold out of the new Flagg, that was released on Tuesday. Coming up with excuses to cover poor corporate buying habits didn't feel any better.

Not having regional buyers also meant losing summer reading sales. All summer reading list have universal authors, like Bronte, Morrison, Twain, and Wright. Beyond the classic authors all lists are regionally inclined and that's were the money is. A customer can stop at any bookstore to buy Bronte. Parents are more then willing to return to bookstore if the store stocked hard to find summer reading titles.

I handled the summer reading list for the last five years. I was lucky enough to have managers who allowed me to get as much as I could in. Our selection was very good, not as good as I would've liked to be but it was the best in the Atlanta area.

There was a time when a store had three chances to get the product in the customers hand. With the Internet and ebooks, its down to one for bookstores. If the item a customers wants is not in stock the first time, they may try back. If its not in the second time the sale is lost. Customers simply have too many options. Not having regional buyers to capitalize on the wants and needs of customers in every market hurt.

2. Coupons - Borders discount program with the coupons was atrocious from the very beginning. Initially there was only one Borders rewards card. It was free and customers were enticed to come back with coupons. Which sounds like a great plan, customers save and store makes money. Its a win/win. Wrong. 25% 30%, and 33% discounts were being sent out every three days. Every so often there was a 40% coupon. Books have a very small mark up. So Borders was barely breaking even with the 33% discount and losing money with the 40% discount

The logic beyond the coupons was that customer who saved would buy more. There were a handful that did. Though in real world beyond the corporate data analysis and sales projections there was more coupon abuse then additional sales. On the store level everyone knew that coupon saturation was a very serious and costly issue but upper management refused to listen.

The abuse could've been maintained or even eliminated if the coupons were place on the Borders Reward cards rather then requiring customers to print them. Many customers would print out stacks of single use only coupons to use on all of their purchases. If it was a 40% coupons many were willing to drive to other Borders to use the coupon more then once.

I really can't fault customers for second infraction. A company that doesn't manage their discounts in a correct manner should expect to be taken advantage of. But the customers printing out stacks of coupons made me sick because based on the rules for usage, they were very much in the wrong. These needless, never pretty run ins with coupon abusers could've been avoided if the coupons were simply tracked on the Borders Rewards Card.

3.Reorganization, The company spent a lot of money on "experts" who would figure out the best way to lay out the store that would result in more sales. The children's department had some of the most changes. Though one thing stayed the same customers found it confusing. Librarians and teachers were always baffled by it, all I could do was shake my head and walk away. I really want to know which expert was responsible for superface outs.

I don't have a picture *, so I will do my best to describe a superface out. At any bookstore you'll usually see 5 or more copies of a single title faced out, drawing attention to the book and the section. A superface out came together with a large quantity, at least 10. 3 copies would be placed down flat on the shelf spine out, 5 would be placed top of the three, and the remaining copies would be put to the left of the faced out copies. Yes someone was paid to come up with that bright idea and yes it looked as silly as it sounds. It was supposed to give the illusion of more books. Though it didn't work and thankfully didn't stay around for too long. Corporate invested so much time and money into various relays to the point of no financial gain.

I never could figure out what was up with Ron Marshall and all those training videos that he insisted on starring in. They were just awful and what a waste of money.

I can't end this without saying free Wi-Fi, is an awful, non money making idea. People would come in seven days a week to use the Wi- Fi and not buy anything. There was very very very small percentage of customers that didn't take advantage. Overall Borders was a study hall/ conference room/office for many thanks to the free Wi Fi

There's a huge misconception that booksellers who work at chains are in it for the money. That is so far from true. We did it or do it because we love books. Everyone at the Borders I worked at was very knowledgeable. We could've held our own against any Indie.

The way Borders handled being in Chapter 11 (no recovery changes were implemented, still gave out 40% coupons) this closing was inevitable and I am glad to see it finally come to an end.

Though I am very sad that a lot of hard working people on the store level will be unemployed including many of my friends that transferred to another store. The only upside is no bonuses will be paid out to upper management.

Come back tomorrow for How to Work/How to Shop at a Liquidated Borders.

* if any Borders employees have a pic of a superface out please place the link in the comments. Thanks


Nicole Pyles said...

I am not that sad about Borders leaving, but I am just a little nervous about Barnes and Nobles fate.

The reasons you gave about why they are going under made me think about why I never really liked Borders...

I only recently moved up to Oregon and there is a Borders in my area. And there is definitely a Barnes and Noble. I couldn't tell you if there was a Borders in the Bay Area of California where I grew up, although I am most certain there is one.

But, really, when you compare the two, I am not a fan of Borders. I am a HUGE fan of Barnes and Noble.

I don't really know why...

...Maybe it's Barnes and Noble's big soft chairs...

...Maybe it's their quieter advertising and their peaceful choice of color (green is good for reading; that BRIGHT RED SURROUNDING YOU WITH BIG HUGE ADVERTISEMENTS? Not so much)...

...Maybe it's the fact that every time I walk into Borders...it doesn't say, "Sit...read...quiet yourself." It says, "BUY BUY BUY BUY BUY NOW NOW NOW NOW"

For some reason it just didn't work out for me....and your post is dead-on about why it didn't...

Marianne said...

Nice post! I shopped at the original Borders in Ann Arbor in the 1970's. I loved how you could walk in without having any particular titles in mind and easily walk out with about a half dozen books with esoteric subject matters that I'd barely even heard of. And I was a teenager who could afford to shop there with babysitting money!

Several things killed Borders for me. As the decades passed their books became much more mainstream, with the cool esoterica becoming a thing of the past. Also, the prices kept going up and up and up. I couldn't buy books as impulse items anymore. Instead, I'd have to think long and hard before I bought a book, and would usually end up just buying a used one from Amazon.

Another thing, I was appalled at how I was unable to locate books in their in-store computer system unless I had very specific information. E.g., if I knew the name of the author and knew that it was the fourth volume of a particular series, that wasn't good enough. Geesh, could my local store have at least had a Google connection?

What really finished me off was how the clerks hounded me unmercifully to open up a Borders Rewards account. For various reasons I don't like to sign up for rewards programs, mostly because I can usually find better deals at other places. I weakened one day and signed up, and naturally I was bombarded with emails and coupon offers until I finally get fed up and unsubscribed.

Erik Beck said...

I would add their inability to figure out what they were selling. I remember at one point in early 09, where they declared they were getting back to their core focus of selling books, so they reduced multimedia in a lot of the stores. But then, in the SAME WEEK, they rebranded the YA section, because they wanted to be "a destination location for kids toys." They clearly had no idea how to run things.

The biggest problem they had for a long time was the idiotic connection with Amazon and lack of a web presence. I was always so frustrated working for Borders that I wanted to kill people - especially the endless string of CEO's who didn't have a clue.

And the worst was the insistence in late 09 that you ask EVERY customer whether they wanted the key book. When I interviewed at a great indie here in Boston (where I started work two weeks later) and was asked why I wanted to leave Borders, I looked at my future boss and said "Will you make me ask every customer who walks through the door whether they want to buy U is for Undertow by Sue Grafton?" She starred back and said "You're kidding."

I only wish I was.

Doret said...

Nicole - Borders and BN attracted different customers. And people should have options.

Marianne - the pressure to get customers to sign up for Borders Reward and BR+, came from corporate. The first card was free the second was 20 dollars a yr.

Erik - The make items were awful, and employees wouldn't get any credit for handselling titles we actually liked.

Vasilly said...

Bravo, Doret! I definitely agree with you on each point. As a customer, it killed me that Borders was making so many mistakes. One point that I want to add is the experience of having salespeople almost harass me about buying clearance books or the new Borders card. Quit asking me all the time! So I'm not sad about Borders closing nor will I not act like a vulture with the going-out-of-business sales. That said, I'm not going to harass the salespeople when I go and I do hate the fact that my city is losing one of the two bookstores that sell new books.

Madigan Mirza said...

Doret, I'm so sorry.

I'm surprised to see the media picking up the "it was e-books that killed Borders" spin, because as a librarian, who had a corporate account there, it was obvious how mismanaged things were.

You can't sell books the way you sell bulk items like cabbages or potatoes.

I'd fax them lists of books that I had approval to purchase with grant money a couple of weeks in advance - they'd promise them, and when I arrived to pick them up - none of the books on my list were there, and I no time to pick out anything new before my grant expired.

Another time, I went in to spend $600 in juvenile paperbacks for my library, and every employee in the store pressured me to buy Decision Points by Bush -- preferably multiple copies. They seemed so frantic about it, I got the impression that they were going to get in trouble for not having a high enough percentage of THAT title sold, and my large purchase was going to mess up their percentages that day.

Very frustrating.

MissA said...

Hmm my borders never harassed you to buy a certain title. They did ask about Rewards cards I lot but we finally got one and no we didn't misuse the coupons! Actually the coupons were frustrating because they only lasted for three days and my dad usually forgot to print them out till the day they expired and by then we didn't have time to use them...

Wow I didn't know the last 5 CEOs had NO book experience. Although I'm not entirely sure what that means either. They should have worked at a bookstore/library/be an avid reader but as long as they had a business background I can see why they would be put in power.

But oh yes the summer reading titles wer fairly good. Since I lived about 10 mins from Chicago but went to school in Chicago, I rarely found books ony my summer reading list but they seemed to work closely with the local schools to have the titles.

Karen L. Simpson said...

I'm from Ann Arbor and this is so sad for our town. Borders was an institution. They were the homes for our writing groups for over 12 years. Your post is one of the best analysis of what went wrong that I've read. Thing started to go down hill when the Borders brothers sold it.

I'm not a big fan of Barnes and Noble. But Ann Arbor had several good independent bookstores so I will be spending my money there.